Imagine this: Nvidia (NASDAQ:NVDA), the AI darling of Wall Street, crashing to just $60 a share. Sounds insane, right? Not really. Nvidia has done it before during market crises and has a history of booms and busts. But with the U.S. government now blocking key AI chip exports to China, triggering a $5.5 billion hit to Nvidia, history might be rhyming again. But here’s the twist: what if that kind of crash is exactly the opportunity it needs to rocket past the $3 trillion market cap? Let us be as clear as possible. We are saying: “grab the stock with both hands if it crashes.”
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Let’s dig in more.
The $5.5 Billion Gut Punch
Nvidia has disclosed a staggering $5.5 billion charge tied to U.S. export restrictions on its H20 chips. These chips were specifically tailored for the Chinese market – now off-limits. Overnight, billions in inventory and contracts went up in smoke. This wasn’t just bad news – it was a reminder that Nvidia’s AI dominance is vulnerable to regulatory changes.And the market reacted fast, sending the stock tumbling.
Why This Could Spiral into a Crash
Let’s not sugarcoat it: Nvidia is a volatile beast. Its track record in rough markets isn’t pretty. Just look at these fall percentage numbers from peak to bottom during past market crises.
- 2022 Inflation Shock: -62%
- COVID Panic: -38%
- 2008 Financial Crisis: -85%
And this time, we’re staring down a cocktail of problems:
- U.S.-China tensions escalating
- Tariff waves hitting tech
- An overheated AI narrative that’s ripe for a reset
- A relatively high valuation (P/E of 37) vulnerable to margin compression
A sharp slowdown in AI spending, tighter regulations, or a broad market selloff could send Nvidia into one of its signature tailspins. A slide to $60 may sound dramatic – but it’s not unthinkable.
But That Slide, Even Partial, Is Exactly What We Are Waiting For
Let’s flip the script.
Despite the regulatory headwinds, Nvidia is firing on all cylinders financially. It just clocked over 110% revenue growth in the past 12 months. Even last quarter – with all the noise – it delivered almost an 80% jump.
Now picture this: let’s cut that growth in half – still amazing. Based on that, Nvidia could deliver over $100 billion in net income in the next 12 months. With a conservative 30x earnings multiple – which by the way is lower than Apple’s despite far higher growth and margins – you’re looking at a $3 trillion valuation. Nothing outrageous about this calculation unless Nvidia’s growth comes to a complete standstill. When you have a stock like this – large dips become great buying opportunities.
Nvidia is a classic example of how you have to bear extreme volatility while chasing returns. We combine different categories of stocks to lower the volatility while maintaining upside exposure in the Trefis High Quality (HQ) Portfoliowhich, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
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